ET Now caught up with Amit Khurana, Co-Head, Institutional Equities and Head, Research, Mangal Keshav, to seek his opinion on whether the aviation sector is a good investment theme or not. Excerpts:

With some positive news coming in, how do you look at the aviation sector as a whole? Is it a good investment theme?

The level of competition that we have seen over the last few years has led to lot of bleeding amongst the airline companies. Any uptick in oil prices would immediately lead to a de-rating on the sector. The month of December saw one of the highest volumes in terms of ticket sales and most of the companies were just about able to do some very nominal levels of EBITDA except for Spicejet which has a very different model. In spite of doing record volumes, the ability of these players to sustain fixed cost is always a challenge. Unless we have these volumes perking up to substantially higher levels, I do not see a very substantial uptick on these companies in terms of profitability or long term growth. The sector has got to witness a very very substantial change if valuations have to sustain from here onwards.